Monday, August 20, 2012

The Week Ahead, EURUSD In Focus

Coming Up This Week!!

  • Tuesday RBA MPC Minutes (AUD)
  • Wednesday US Existing Homes Sales (USD)
  • Wednesday FOMC Meeting Minutes (USD)
  • Thursday German & French Manufacturing PMI
  • Thursday US New Homes Sales (USD)
  • Friday UK Revised GDP (GBP)
  • Friday US Durable Goods Orders (USD)
  • Next Month… ECB Meeting, lots of speculation on what they will do

German newspaper Der Spiegel wrote over the weekend that the ECB is planning on instituting rate caps for EU sovereign debt. Under the plan, the ECB would be buyers of sovereign bonds to support falling prices when interest rate yields went above specific cap levels. The rumor follows last week’s statements from German Chancellor Angela Merkel that Germany was in favor of letting the ECB act to save the Euro. Even though we are more than two week’s from the ECB’s upcoming Interest Rate Meeting the speculation on what the central bank will do is dominating the week’s early trading headlines. As such, if any members from the ECB come out against the current rumors it could trigger EURUSD weakness and possible risk selling in the overall markets.

Charts to Watch 

EURUSD: The EURUSD is seeing short term support at 1.2250 while also being in a steady uptrend since its July lows. Nonetheless, its long term down trend is intact and it will need to trade and close above 1.2400 to reveal that demand for the pair is getting more aggressive.

GBPUSD We’ve mentioned this pair and its 1.5450/1.5750 trading range quite a few times in the past. Currently, it’s in a short term uptrend channel which suggests that demand for the GBPUSD is increasing and could lead to a sustained breakout if we trade above 1.5760.

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